The Fund will select investment properties that target the tenant class with the most stable rental demands in light of location and market conditions.
More specifically, the Fund will mainly target the following tenant class:
| Focus Tenant Class | Other Tenant Classes | ||
| Target | Middle class tenants, centering on Corporate employees in their 20s and 30s and students. | Upper middle class tenants, such as foreign company employees | Upper class tenants, such as companies with rent subsidization systems, business owners, management class employees of foreign companies |
| Features | Priority on certain level of convenience for commuting and rent. Annual income (disposable) is stable. Less likely to be affected by economic trends. |
Priority on location, floor plan, and specifications/ equipments. Annual income (disposable) is relatively stable. Relatively less likely to be affected by economic trends. |
Priority on prime metropolitan location, property grade, and value-added services. Annual income (disposable) is likely to be affected to be economic trends. |
| Turn-Over | Significantly affected by seasonal factors, such as concentration of termination and execution of rental agreements in March, when corporate employees enter/get transferred, and students enter/graduate. | Effect of seasonal factors is relatively small compared to the middle class. | Demand is limited, and vacancy tends to be longer. |
| Rent | Generally less than ¥100,000 per month |
Generally ¥100,000 - 150,000 per month |
Generally over ¥150,000 per month |
Relative Frequency Distribution of Number of Households Based on Household Income
The Fund will invest in quality residential properties, generally taking into consideration the "Urban Location," "Basic Functionality" and "Quality," emphasizing on the long-term asset value and maintenance of profitability of the properties as an "investment product."
| Urban Location |
A location that expect stable tenant demand. |
|---|---|
| Basic Function | Well-balanced specifications (comfort/functionality/economical/upgradeable) Basic building functionality that secures superior interior comfort, such as "sound insulation," "thermal insulation," and "safety." |
| Quality | Quality structure with long-term durability (concrete frame, steel reinforcement, etc.) Design based on sufficient quality control. |
The Fund considers the "rent level," "access," and "commuting time" as the key factors for property selection and investment decisions, corresponding to the tenant classes.
| Rent Level | Rent level suited for the target tenant class |
|---|---|
| Access | Popular railway lines, direct connection to large terminal station |
| Commuting Time | Commuting time required to reach destinations for target tenants |
Nomura Real Estate Group, through many years of managing residential properties, has built a wide range of sourcing routes regarding property acquisition. The Fund, by fully utulizing the strong sourcing routes of each brand (named according to the characteristics of each property), will continue to actively acquire property.
